The myth about the resilience of Pakistan’s economy has been busted. We have reached a stage where experts are at a loss on how to move ahead. All paths lead to a disaster. The system is totally dependent on loans. The moment loans are stopped there will be a disaster.
In 2023, the economy went from bad to worse. It continues to be on a virtual ventilator. The state expenditure continues to grow without a similar increase in revenues. The situation has not improved since the Pakistan Democratic Movement government handed over the reins to the caretakers. Uncertainty has scaled new heights.
Debt-servicing is currently the biggest issue.The foreign exchange reserves remained low throughout the year despite the IMF expressing satisfaction with policy tweaks. Over the next 30 months, we have to make over $60 billion foreign debt repayments. The revenues increased during the current year in line with the fixed targets. However, the targets were not in line with the resource requirements. It has been argued that it is prudent to fix realistic targets. However, there was no sign of the approach on the expenditure side and the fiscal gap continued to widen.
The crises include a five-decade high inflation rate (over 30 percent), the highest ever key policy rate (22 percent), enhanced rated of taxes and a huge devaluation of the domestic currency (Rs285) against the US dollar.
Credit must be given to the caretaker government for sticking to the International Monetary Fund prescription and keeping the economy solvent. The dark clouds of default that loomed large on the fiscal horizon have been avoided.
However, some of the actions taken on the IMF demand have intensified the miseries of the masses. The petrol prices have made life difficult for commuters. High power rates now consume a major chunk of the monthly household budget. The high energy costs have made many........